Rhapsody Says Major Label Licensing Is Still a “Brutal, Brutal Reality…”

Rhapsody has been in the market for more than ten years, and they’ve licensed – and relicensed – the major labels over and over again.

They also have more than one million subscribers, but they’ve accomplished that with immense licensing overhead.  And now, a top licensing lawyer at the company says this system is simply not working.

Here’s what Rhapsody VP and General Counsel Cecily Mak told an audience at Digital Music Forum East in New York on Thursday.

“Speaking for the smaller distributor or one that’s seeking to enter into market, perhaps the bigger problem is getting the sound recording license in the first place. We had as recently as last week at SF MusicTech somebody from a major record label [ie, UMG executive David Ring] basically sit there and say publicly that to get that license from the major record label you need to bring significant advances [and] you need to give up equity in your company.”

[long pause]

“I could comment further on that but it’s just a brutal, brutal reality for companies that want to do something really innovative and cool and come into market.  And I think it’s perhaps too significant of a barrier.”

13 Responses

  1. Arthur J. Owens

    Word. The majors continue to fail to cultivate the legitimate online music business. Instead they seek to bleed those businesses, while failing to realize that weakening legitimate online entrepreneurs only leaves a vacuum to be filled by illegal sites. While some indies are more flexible in their terms, many important indies are actually distributed by subdivisions of the majors (i.e., ADA). The current landscape is not going to change without some major changes at the top of the foodchain, and in the meantime new ideas for legitimately promoting, licensing, and selling music online will be stifled. This industry is in a slump not only due to piracy, but due to short sighted management.

  2. reality

    Major record labels never were and never will be about music. They are marketing firms whose primary PRODUCT happens to be sound recordings. They are selling their brand.

    • mdti

      i thought that their primary product was cabaret and alcohol in dark and smokey al capone style bars…

  3. driver49

    That’s why the future of the Celestial Jukebox has always been “Whatever you want to hear, whenever you want to hear it–IF the bastards ever let us.”

  4. Person

    So streaming services are not profitable because of high licensing fees. Artists aren’t making anything from streaming services. So how much are labels raking in?

  5. Spoken X Digital Media Group

    There’s two–both sides on every penny coin. For instance take that sound recording that was publicly performed and downloaded on every major digital service in the universe and the owner just sent in his montly expense sheet to his case worker at the food stamp office ! : ‘ You want brutality fom a certified publisher ? How about a thirty-eight up your nose to clean out your brains? ‘. . .LX

  6. rodney

    If the majors are being unreasonable, cut them loose. There’s plenty of great independent music out there. If you think their music is just too important to ignore, then pay up and quit whining.

  7. curious

    Why are labels always complaining about money, but they can’t be bothered to take sites like wallywashis.name out of Google Search?

    All these expensive lawyers can’t use a browser?

  8. Mark

    Rhapsody, Spotify et al actually have a lot more leverage than these comments suggest. Music fans are not running directly to the major labels for music. Fact is, the majors *need* powerful, easy-to-access distribution options that are popular with the public. If the majors want to insist on advances and equity stakes, fine, but it’s going to be a tall mountain to climb. Ms. Mak makes a valid point about the greed of the majors, but she also represents the interests of a company in perpetual negotiation with them. There is money to be made from hit records (as opposed to most independent records), and this is just the latest salvo in the battle to carve it up.

    So let’s hold our applause until someone stands up for the indies who don’t have the clout to make these kinds of demands.